More capacity does not fix a missing client ledger
QuickBooks Online Advanced removes the published chart-of-accounts and class/location limits that constrain Plus. It supports 25 billable users and custom roles. It is not unlimited in every respect, and its extra capacity does not prevent a negative client trust balance.
For a high-volume PI firm, the main problem is consistency. One omitted Customer, a duplicate Vendor for a client, or an unreviewed bank-feed rule can split the record across systems. Use one documented trust allocation method before adding more classes or users.
A pooled trust bank balance can look healthy while an individual matter is overdrawn. The client-level review must happen before release, even if QuickBooks permits the transaction.
Set up the trust accounts and names
- Create the real IOLTA bank account in the chart of accounts. In QuickBooks Online, choose Bank and the Trust account detail type where available. Use a clear name such as IOLTA - Main. Keep operating funds in a separate bank account.
- Create Client Trust Liability as Other Current Liabilities. In Online, choose Trust Accounts - Liabilities where available. Desktop uses account types rather than the same Online detail-type menus. The total trust liability must equal the corresponding trust book bank balance.
- Create one Customer per client. Use a sub-customer, Project or Customer:Job for each matter when a client has multiple matters. Use the same client and matter identifier throughout the settlement.
- Create doctors, lien holders, referral attorneys and other third-party payees as Vendors. Pay the client's own share to the existing Customer on a Check or supported Expense form. Do not create a second Vendor record just to pay that client.
- Use Client Trust Liability on every trust deposit and payout line, with the correct Customer or matter on the line. Enable the Customer column where needed. The payment's header payee identifies the recipient; the line's Customer identifies whose money is being used.
- Load opening client balances from verified ledgers. Confirm that their sum equals the trust bank book balance. Do not invent an income deposit to make an opening difference disappear.
- Test one settlement before relying on the report. Record its deposit, doctor payment, client payment and earned-fee transfer. Confirm every trust line appears under the right client and that no client ledger goes below zero.
Customer, class, or both?
Use a Customer per client and a sub-customer or Project per matter as the primary ledger allocation. Classes can provide an additional management view. They should not silently replace the identity of the client whose money is held.
| Method | Use | Strength | Control required |
|---|---|---|---|
| Customer per client, recommended | Customer / Project on every trust deposit and payout | The same identifier follows receipts, payees and the client ledger | Block release until the matter and collected balance have been reviewed |
| Class per case | A distinct class for each matter as a reporting overlay | Can support a firm with an established class-based reporting policy | Advanced removes the Plus class cap, but each trust line still needs the correct client allocation |
| Both | Customer for ownership, class for the firm's secondary reporting view | Client-ledger detail plus management segmentation | Require both fields consistently and resolve mismatches before close |
Record a settlement, line by line
Record the settlement deposit and confirm the funds are collected and available before writing any check against it. A bank feed entry or provisional bank credit is not proof that the deposit has cleared. Follow applicable trust rules and bank confirmation requirements.
The example trust deposit is $100,000. The $15,000 doctor payment, $50,000 client share and $35,000 earned fee total $100,000. The separate $500 operating case cost does not reduce that trust ledger. If the settlement authorizes reimbursement of a prior case-cost advance, record that separately with accountant-approved treatment.
An earned-fee payment reduces trust liability. The operating-side receipt then recognizes earned income or settles an existing receivable. Do not use a bare bank-to-bank Transfer as the whole entry: it does not by itself reduce the client's liability or explain the fee. Do not recognize the fee twice.
The Customer column is an allocation field, not a second payee. Use the client or matter on each category line, including a check payable to a Vendor. Use a Check or supported Expense form for the client's payout if a bill-payment workflow requires a Vendor. Check the report after posting.
| Transaction | Screen and bank account | Payee / received from | Account on the line | Customer on the line |
|---|---|---|---|---|
| Settlement deposit: $100,000 | Bank Deposit / Make Deposits into IOLTA | The client's Customer record in Received from | Client Trust Liability | Client or matter; Received from supplies the deposit name |
| Doctor or lien holder: $15,000 | Check / Expense, or Write Checks, from IOLTA | Doctor or lien-holder Vendor | Client Trust Liability, not a firm expense | The client or matter whose funds are being used |
| Client's share: $50,000 | Check / supported Expense, or Write Checks, from IOLTA | The existing Customer, not a duplicate Vendor | Client Trust Liability | The same client or matter |
| Earned attorney fee: $35,000 | Check / Write Checks from IOLTA to the firm; record the operating receipt separately | The law firm / operating account | Client Trust Liability on the trust payment; earned fee income or receivable settlement on the operating side | The same client or matter on the trust line |
| Case cost from operating: $500 | Check / Expense, or Write Checks, from operating only | Court, expert or other Vendor | Client-cost advance asset or appropriate cost account under the accountant's policy, not Client Trust Liability | The client or matter receiving the cost |
How to see each client's balance
Run Transaction Detail by Account. Filter Account or Distribution Account to Client Trust Liability, including its sub-accounts if used. Group by Customer, show the Customer or Customer:Job column, and include the matter identifier. Report menus vary by version and reporting view.
Use all dates through the reporting cutoff, or include a verified opening balance. A subtotal over only this month's activity is a change in balance, not necessarily the amount still held. On a liability report, credits increase the amount held and debits reduce it; check the report's sign convention with your accountant.
Each client's ending subtotal is what the firm still holds for that client. Separate matters when required. Review blank or Not specified groups, investigate negative balances, and confirm the sum equals Client Trust Liability and the trust bank book balance. Save the report with its filters and date basis.
Separate preparation, accounting review and payment release
Use custom roles as part of a separation-of-duties policy. Start with the following responsibilities, then test what each role can actually do in the firm's subscription. QuickBooks permissions and a bank's payment authority are different controls.
- Save one standard client-ledger report with the agreed account, Customer grouping, columns and date basis.
- Review blank allocations and negative client balances before any payment batch.
- Complete monthly three-way reconciliation with an identified preparer and reviewer.
- Retest roles after a subscription, bank connection or approval-workflow change.
| Role | Responsibility | Check before rollout |
|---|---|---|
| Settlement team | Prepare the statement, client allocation and proposed payees | Confirm whether the permitted transaction actions separate preparation from payment. Do not assume create access cannot release funds. |
| Accounting and authorized signer | Review collected funds, allocations and approvals; approve and pay | Use the applicable bank or Disbo release workflow where a second approval is required. |
| Outside accountant | Review reports and month-end evidence without initiating payments | Use an appropriate view-only or reports-only permission set. An accountant-user invitation alone is not a promise of read-only access. |
Keep the high-volume workflow controlled
Unlimited accounts and classes are capacity features, not a reason to create unnecessary lists. A shared liability plus Customer allocation usually produces a more consistent ledger than thousands of extra chart accounts.
When another system posts payments, confirm how Customer and Project identifiers are mapped. Review one doctor's check, one client-share payment, one partial payout and one earned-fee payment before accepting a bulk import.
Keep a fixed cutoff at month-end. Post corrections with an explained audit trail and review their effect on both the bank reconciliation and client report. State requirements may add review, retention or reporting obligations.